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REDEMPTION OF SHARES


Section 60(1) empowers a company limited by shares to issue preference shares which are at the option of the company liable to be redeemed, if the articles authorize such issue.  It however provides that: -
(a)    No such shares shall be redeemed except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption.

(b)    No such shares shall be redeemed unless they are full paid.

(c)    The premium if any payable on redemption must have been provided for out of profit of the company or out of company’s share premium account.
(d)   Where any such shares are redeemed otherwise than out of a fresh issue, there shall, out of profits which would otherwise have been available  for dividend, be transferred to a reserve fund to be called “Capital Redemption Reserve Fund”, a sum equal to the nominal amount of the shares redeemed.

 
 
 

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